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There is something very strange taking place in the financial markets presently. Main Stream Media has actually convinced the majority of investors in the west that gold is now in a bear market while the real value is found investing in stocks and bonds. It’s one thing to invest in equities or treasuries when they are undervalued, but to promote these assets when they have become the biggest bubble in history… is quite insane. The world has been turned upside down. Real value today is bad, and lousy values today are good… very strange. This is especially true for the ZOMBIE BANKING SYSTEM.
On the other hand, gold and silver prices have been severely beaten down and are now extremely undervalued. This is actually the right time to be buying precious metals while exiting positions in stocks and bonds. However, the exact opposite is taking place in the west as investors dump precious metal contracts and purchase overpriced equities. Furthermore, hedge funds now hold the highest number of gold short positions ever.
So, the question remains, how on earth can gold and silver be selling off when the broader markets are in a massive bubble and the rest of the financial world is a compete mess? There’s a simple answer:
Banks Selling Garbage for a Premium
The world’s economy is in tatters and safe havens are few and far between, says legendary contrarian Marc Faber. The banking crisis in Cyprus has shown that even bank deposits are not safe. The publisher of the Doom, Boom and Gloom newsletter, surveying the world from his perch in Hong Kong, discusses the impact of unemployment in Europe, the economic slowdown in China, asset bubbles and the turnaround prospects for precious metals miners. Faber also reveals his investment strategy for these volatile times in this must read interview.
Today’s chart of the day examines gold premiums in China in the wake of the April smash. In late April when Jim Willie stated that physical gold was trading at a massive premium in Asia, many readers scoffed. As the Bloomberg chart below demonstrates, physical gold premiums did indeed skyrocket in the wake of the cartel’s epic paper takedown, with premiums jumping from $7 to $120/oz!
“Premium is a function of demand and supply, and right now you could interpret the high premium in Shanghai as a sweetener to entice the overseas gold supply to flow into China.” -Bank of China’s Qu
In the wake of the Cypriot depositor bail-in, DIESELBOOM let the cat out of the bag that the Cyprus depositor bank bail-in was the template for future bank crises across the Eurozone, a fact we quickly substantiated by uncovering bail-in legislation in the US, UK, and Canada.
The banksters’ banksters (aka the BIS) have just officially confirmed what SD readers have known a full 3 months- and have released the official depositor bail-in blueprint!
By SD Contributor Marshall Swing:
Commercial longs sold off a total 1,326 1,037 contracts and covered 4,918 net total shorts to end the week with 48.59% of all open interest, a decrease of 1.02% in their share of total open interest since last week, and now stand as a group at 41,670,000 ounces net short, which is a decrease of almost 18 million net short ounces from the previous week, a massive net short covering of over 30% of their entire short silver position!
I had the chance on Friday to reconnect with technical gold trader Gary Savage, publisher of the “Smart Money Tracker” daily gold market commentary and trading service, which has outperformed most of the world’s hedge funds in 2011 and 2012.
It was a powerful conversation as Gary indicated the S&P 500 is at its most overbought level in nearly 40 years, and may crash 10%-20% within a few trading days as a result. Following this crash, Gary expects a massive central bank monetary intervention to create the “launch pad” for an explosive move higher in gold and gold equities, ushering in the final bubble stage of the bull market.
“We’re at a very important crossroads here,” Gary explained at the beginning of the interview. “The S&P 500 [broke] through 1640…and I expect we’re going to have some kind of crash, or semi-crash over the next 5-10 days…The selling is probably going to get huge…and it [may] take everything [down] with it.”
The world is in the middle of a huge central bank bubble.
Physical gold and silver must be acquired regardless of price, because no one can know when the central bankers will lose control and price will erupt like Eyjafjallajökull.
We cannot control the markets, but we can control how to respond to what they are saying.
The paper market has been turned into a circus, thanks to JP Morgan, and abetted by the exchanges, COMEX and LME. Focus has to remain on the physical market, for it is where one can expect to find true value for price. What everyone has learned is that as price has declined, demand has disproportionately skyrocketed.
After a normal waterfall sell-off on the COMEX open, Silver has just retraced its losses, and made a .50 vertical pop to the upside to $23
Gold and Silver will become two of the best assets to own in the future, however most investors are still clueless to why this is true. Currently, the Main Stream Media Bandwagon has hoodwinked the majority of investors into buying and holding some of the most overpriced, dead-end, and increasing worthless investments in the market. These investments include most stocks, bonds, retirement accounts, pension plans, commercial and residential real estate.
THE BEST FUNDAMENTAL REASON TO OWN GOLD & SILVER IS DUE TO THEIR STORE OF ENERGY VALUE.
Most gold and silver bugs believe in the precious metals because they have no counter-party risk. Once an investor purchases an ounce of gold or silver, they own the asset outright which behaves like a store of value.
However, I believe most of the precious metal investors fail to grasp that it is the energy value component in gold and silver that make them such an excellent store of value. The $85.2 trillion in global conventional assets are not assets but rather ENERGY IOU’s that need to be repaid in the future.
It’s these times—volatile markets that shake you to your core—when you truly learn what kind of investor you are, says Sean Rakhimov, the founder of SilverStrategies. The investors who face these testing times, never forgetting why they sunk their funds into precious metals in the first place, are soon to be rewarded, according to Rakhimov. In this interview with The Gold Report, Rakhimov explains why he believes that investors who haven’t been shaken out of stocks yet will be able to cash in on a “triple” headed to the silver sector and discusses a handful of companies that investors need to pay attention to.
This is no time to be complacent. Massive economic problems are erupting all over the globe, but most people seem to believe that everything is going to be just fine. In fact, a whole bunch of recent polls and surveys show that the American people are starting to feel much better about how the U.S. economy is performing. Unfortunately, the false prosperity that we are currently enjoying is not going to last much longer. Just look at what is happening in Europe. The eurozone is now in the midst of the longest recession that it has ever experienced. Just look at what is happening over in Asia. Economic growth in India is the lowest that it has been in a decade and the Japanese financial system is beginning to spin wildly out of control. One of the only places on the entire planet where serious economic problems have not already erupted is in the United States, and that is only because we have “kicked the can down the road” by recklessly printing money and by borrowing money at an unprecedented rate. Unfortunately, the “sugar high” produced by those foolish measures is starting to wear off. We are going to experience a massive amount of economic pain along with the rest of the world – it is just a matter of time.
What happened back in 2008 was just a preview.
What is coming next is going to absolutely shock the world.